Search Results
Showing results 1 to 10 of approximately 22.
(refine search)
Report
Allocation and Employment Effect of the Paycheck Protection Program
The Paycheck Protection Program (PPP) was a large and unprecedented small-business support program enacted as a response to the COVID-19 crisis in the United States. The PPP administered almost $800 billion in loans and grants to small businesses through the banking system. However, there is still limited consensus on its overall effect on employment. This paper explores why it is challenging to estimate the effect of the PPP. To do so, we first focus on the timing of the allocation of PPP funds across regions and firms. Counties less affected by COVID-19 and with a larger presence of ...
Working Paper
The Tail That Wagged the Dog: What Explains the Persistent Employment Effect of the 10-Day PPP Funding Delay?
This study explores the mechanisms explaining the large, persistent effect of the 10-day funding delay in the 2020 Paycheck Protection Program (PPP) on employment recovery during the COVID-19 pandemic, as estimated by Doniger and Kay (2021). We find that the top 1 percent of urban counties by population fully account for the significant effect of the delay on county-level employment. The strong correlation between worse loan delay and slower employment growth in these counties is due to a factor commonly omitted from analyses: The nature of business and the high rate of human interactions in ...
Journal Article
Fiscal Relief during the COVID-19 Pandemic
In response to the sharp economic downturn during the COVID-19 pandemic, Congress passed unprecedented policy relief measures to support households, businesses, and the broader economy. Compared with previous fiscal stimulus responses, these relief programs have been unmatched in size and scope, speed of response, and novelty of design.Huixin Bi and Chaitri Gulati review recent empirical research on three fiscal relief programs—stimulus checks, augmented unemployment insurance (UI) benefits, and the Paycheck Protection Program (PPP)—to understand their effects on the broader economy as ...
Discussion Paper
Who Benefited from PPP Loans by Fintech Lenders?
In the previous post, we discussed inequalities in access to credit from the Paycheck Protection Program (PPP), showing that, although fintech lenders had a small share of total PPP loan volumes, they provided important support for underserved borrowers. In this post, we ask whether smaller firms received the amount of PPP credit that they requested, and whether loans went to the hardest-hit areas and mitigated job losses. Our results indicate that fintech providers were a key channel in reaching minority-owned firms, the smallest of small businesses, and borrowers most affected by the ...
Discussion Paper
Who Received PPP Loans by Fintech Lenders?
Small businesses not only account for 47 percent of U.S employment but also provide a pathway to success for minorities and women. During the coronavirus pandemic, these small businesses—especially those owned by minorities—were hard hit as consumers reduced spending disproportionately on services that require in-person physical interaction, such as hotels and restaurants. In response, the U.S. government launched the Paycheck Protection Program (PPP) to provide guaranteed and potentially forgivable small business loans. In this post, we examine financial technology (fintech) lenders ...
Working Paper
Optimal Allocation of Relief Funds: The Case of the Paycheck Protection Program
The Paycheck Protection Program (PPP) was a large and unprecedented small-business support program that allocated $800 billion in loans and grants to small businesses following the onset of the COVID-19 crisis. This paper explores the optimal allocation of funds across firms and the distortions caused by allocating these funds through banks. We show that it can be optimal to allocate funds to the least or most affected firms depending on the underlying distribution of the shock that firms face, the firms’ financial position, and the total budget available for the program. In the model, as ...
Working Paper
What Do 25 Million Records of Small Businesses Say about the Effects of the PPP?
We utilize Dun & Bradstreet data on firms’ financial condition to examine the allocation of Paycheck Protection Program (PPP) loans and their impact. Three main findings emerge. First, firms in better financial condition prior to the COVID outbreak were advantaged in the allocation of PPP loans. Second, firms’ financial condition improved significantly and persistently after receiving a loan, and this effect was more pronounced among the smaller and less financially sound firms. Third, we demonstrate empirically that the heterogeneity in firms’ financial condition must be accounted for ...
Working Paper
Paycheck Protection Program: County-Level Determinants and Effect on Unemployment
This paper uses U.S. county-level data to study the determinants and effects of the Paycheck Protection Program (PPP). The paper first overviews the timeline and institutional aspects of the PPP, implemented in the second quarter of 2020 and worth about $669 billion in forgivable small business loans guaranteed by the Small Business Administration (SBA). It then studies the determinants of the county-level ratios of PPP loans per job lost during the original unemployment surge associated with the onset of the COVID-19 pandemic in late March 2020 and finds that it does not appear to be a major ...
Journal Article
The Great Resignation and the Paycheck Protection Program
A prominent feature of the US labor markets during the recovery from the COVID-19 recession was a high level of worker separations in the form of quits. This phenomenon, sometimes referred to as the Great Resignation, cannot be fully explained by the strength of the recovery. We show that firms that employ fewer than 250 individuals played a disproportionately larger role in generating excess quits during this episode. We further argue that the availability of Paycheck Protection Program funds might have prevented some “usual” reallocation from happening early on and thus subsequently ...
A Post-Mortem of the Paycheck Protection Program
The Paycheck Protection Program, which ended on May 31, involved thousands of lenders and $800 billion in small-business loans. How successful was the PPP?